Como se combate o populismo? "Com eleições", responde Fukuyama

[Scubawarrior]

...cheiram a dejá vu!

[pvk]

Amazon.com's 4th-Qtr Net Income Falls 43% on Spending (Update5)

Feb. 2 (Bloomberg) -- Amazon.com Inc., the world's largest online retailer, said fourth-quarter profit fell 43 percent on holiday discounts and rocked investors with a disappointing annual earnings forecast.

The shares tumbled 9.9 percent in after-market trading, the biggest drop since October. Amazon.com said net income declined to $199 million, or 47 cents a share, from $347 million, or 82 cents, a year earlier. Sales rose 17 percent to $2.98 billion, the Seattle-based company said today in a statement.

An offer of unlimited shipping for $79 caused Amazon.com's expenses for delivery and marketing to surge 31 percent to $502 million. Chief Financial Officer Tom Szkutak told investors the ``very expensive'' program was a ``long-term investment.''

``This is a company where management is still committed to spending earnings to stimulate future growth and market share,'' said Tim Ghriskey, who helps manage more than $1 billion including Amazon.com shares at Solaris Asset Management in Bedford Hills, New York. ``You are betting with management that their efforts are going to pay off. Is there any guarantee? No.''

Piper Jaffray & Co. analyst Safa Rashtchy, top-ranked by StarMine Professional, estimated profit of 19 cents for the quarter. The average estimate of 18 analysts surveyed by Thomson Financial is 21 cents. Thomson declined to provide the parameters for the estimates in the survey.

Shares of Amazon.com fell $3.25 to $38.49 at 4:25 p.m. after the close of stock trading. The shares fell $1.24 to $42.74 at 4 p.m. in Nasdaq Stock Market composite trading. The shares have risen 2.7 percent in the past year through yesterday. The company reported results after the close of trading.

Battling EBay

Amazon said full-year 2006 sales will be between $9.85 billion and $10.45 billion. The average estimate of 15 analysts surveyed by Thomson is $10.16 billion.

The company forecast full-year 2006 operating income of $370 million to $510 million, below the $636 million average estimate of 13 analysts surveyed by Thomson.

Of 21 analysts tracked by Bloomberg, 10 have a ``hold'' rating on Amazon.com shares, eight say ``sell'' and three say ``buy.''

Chief Executive Officer Jeff Bezos is increasing spending as the company is being challenged by EBay Inc. and Google Inc.

Bezos has repeatedly said Amazon.com's goal is to increase free cash flow because net income can rise while a company's shareholder value declines. Free cash flow, or cash from operating activities adjusted for interest expense, stock option expenses and capital expenditures, rose 11 percent to $529 million in 2005.

Losing Share?

Profit at Amazon.com has fallen for three consecutive quarters on increased spending and higher legal and tax expenses. EBay, the world's largest online auctioneer, has posted profit increases of at least 36 percent in each of the last three quarters as it has lured new listings from merchants selling everything from electronics to furniture.

To combat gains from EBay and Google, which is winning merchants who are buying ads linked to Internet search results, Amazon.com is now selling used and refurbished items like computers and DVD players.

In October, Amazon.com said last quarter's sales may rise to between $2.86 billion and $3.16 billion.

The company at that time also cut its operating income forecast to a range of $403 million to $478 million for the year from as much as $515 million in July. It said then full-year sales would be $8.37 billion to $8.67 billion.

Holiday Sales

Amazon.com said on Dec. 26 that shoppers bought 108 million items between Nov. 1 and Christmas. Aside from the $79 shipping plan, the company introduced an online gift organizer to help shoppers make purchases and provided shopping guides from more than 40 magazines including Esquire and Cosmopolitan.

U.S. retailers saw strong gains from Internet sales during the holiday season. Total online sales in the U.S. from Nov. 1 to Dec. 31 jumped 25 percent to $19.6 billion, according to Reston, Virginia-based ComScore Networks.

Amazon.com may be losing market share to traditional retailers such as Wal-Mart Stores Inc. and Target Corp. as well as to comparison shopping engines and search portals, wrote J.P. Morgan analyst Imran Khan in a report last month. Khan lowered the rating on Amazon.com to ``underweight'' from ``neutral.''

``A U.S. growth rate which lags the broader e-commerce market is indicative of market share losses,'' wrote Khan. ``The company's traffic share may continue to come under pressure.''

Expensive Stock?

The stock ``seems expensive,'' said Alan Loewenstein, who helps manage $100 million in Garden City, New York-based American Fund Advisors, a former Amazon.com shareholder. ``It's not growing as fast as the other companies like EBay or Google.''

Amazon.com shares are priced about 51 times its 2006 per- share profit estimate, compared with 15 times for Wal-Mart, 18 times for Target, and 44 times for EBay, according to a report by analyst Jordan Rohan of RBC Capital Markets.

Bezos, 42, has increased discounts on books with publishers' list prices of more than $25 to 34 percent from 30 percent. He's also selling more merchandise from retailers such as Federated Department Stores Inc.'s Macy's. Those retailers pay Amazon.com a fee on each sale.

The online retailer is involved in a lawsuit with Toys ``R'' Us Inc., which claimed Amazon.com violated a contract making Toys ``R'' Us the exclusive toy seller on its site.

(For Amazon.com's earnings conference at 5 p.m. New York time, see {LIVE <GO>}.